Chennai: The hospitality sector has hailed the revised GST slab on hotel room tariffs that effectively widens the tax slab of 18 per cent to tariffs ranging between Rs 2,500 and Rs 7,500 instead of the previous upper limit of Rs 5,000. Although the hotel industry was hoping for a more competitive and simpler GST, it has welcomed the partial relief.
Along with the revision in the slabs for room tariffs, the tax rate for air-conditioned restaurants including restaurants in 5 star hotels will have GST at 18 per cent, effective July 1, 2017.
“This is a welcome revision. But, if India has to remain competitive as a tourist destination, this may just not cut the ice. While neighbouring countries pay 5 per cent to 12 per cent GST or equivalent tax, hotels in India would be levying 18 per cent and 28 per cent GST. This may not augur well with foreign inbound tourists who are lured with significant deals and sops by our neighbours. We should remember that we are living in a very competitive world, and tourists today have a lot of choices,” says Dilip Datwani, President, HRAWI.
The Council decided that the 28 per cent GST would be imposed on hotel rooms with a tariff of Rs 7,500 above against the previous proposal of Rs 5,000 and above. Rooms with tariffs between Rs 2,500 and Rs 7,500 will attract 18 per cent.
The GST on restaurants in five-star and luxury hotels has been reduced from 28 per cent to 18 per cent, bringing it at par with standalone air-conditioned restaurants. Food & beverages form 30-40 per cent revenue for five-star hotels.
While the revision is expected to provide hotels and restaurants some relief, hoteliers feel that the GST continues to be unviable even now. India needs to be not just promoted as a tourism destination but also needs to offer value for money to tourists. With countries around us levying taxes that are effectively half of our GST rates, in the long term the tourist inflow is bound to suffer, a senior office bearer of the association said.